Inverse Head and Shoulders Pattern Signals Bullish Reversal

Manuel

Forex

Economic

Summary:

The recent support level at 1.3940, which was also touched on October 8th, forms the shoulders of the pattern.

BUY USDCAD

EXP

TRADING

1.39602

Entry Price

1.40600

1.39000

1.39499 -0.00070 -0.05%

0.0

Pips

Flat

1.39000

Exit Price

1.39602

Entry Price

1.40600

The Canadian Dollar (CAD) is set to be heavily influenced by November labor market data, scheduled for release on Friday. The consensus forecast anticipates the Canadian Unemployment Rate will tick higher, reaching 7.0% from the 6.9% rate recorded in October. Meanwhile, the overall size of the labor force is expected to remain generally stable.

The latest third-quarter Labor Productivity figures offered a slightly favorable signal for the Canadian Dollar earlier this week. Productivity increased by 0.9% quarter-over-quarter (QoQ), significantly improving from the -1.0% contraction in the preceding quarter and comfortably surpassing the 0.4% forecast. Attention is now firmly fixed on Friday's labor market release, which is considered crucial ahead of the Bank of Canada's (BoC) interest rate decision on December 10th.

The latest U.S. economic data presented a conflicting view of the economy's health. The ISM Services PMI edged up to 52.6 in November from 52.4, surpassing the 52.1 expectation and signaling sustained expansion in the service sector. Conversely, the ADP Employment Change report showed a surprising fall of 32,000 in private sector payrolls in November, drastically missing forecasts for a 5,000 increase. The revised October figure was also downgraded to a lower gain of 47,000. These cuts confirm that private businesses shed 32,000 jobs in November, signaling a clear deceleration from the previous month’s gains.

Amidst the softer labor data, political commentary continues to fuel speculation of a rapid rate-cutting cycle. U.S. President Donald Trump stated on Tuesday that he would announce his nominee for the next Fed Chair in early 2026, confirming his statement from Sunday: "I know who I’m going to choose, yes. We will be announcing it." Further adding to the dovish speculation is an unconfirmed report suggesting that former White House Economic Advisor, Kevin Hassett, has emerged as the favored candidate, viewed as an ally who supports the President's call for faster and deeper rate reductions.

Market participants are currently pricing in an approximately 88% probability of a 25 basis point (bp) rate reduction at the Federal Reserve's upcoming meeting, according to the CME FedWatch Tool. Despite the dovish outlook, U.S. Treasury yields remain firm, with the 10-year Treasury yield sitting at 4.086%, while U.S. real yields hold stable at 1.856%. Inverse Head and Shoulders Pattern Signals Bullish Reversal_1

Inverse Head and Shoulders Pattern Signals Bullish Reversal_1

Technical Analysis

The USDCAD pair appears to be charting an Inverse Head and Shoulders (IHS) pattern, a classic bullish reversal formation. The recent support level at 1.3940, which was also touched on October 8th, forms the shoulders of the pattern. The local low of 1.3888, reached on October 29th, constitutes the head. Price action has already reacted strongly upward upon reaching this level. If this pattern confirms, we could anticipate a bullish recovery targeting the 1.4063 resistance zone, which represents the most significant short-term hurdle.

Further supporting the bullish case, the Relative Strength Index (RSI) reached the 26 level, entering clear oversold territory. This extreme reading is likely to attract buyers to initiate long positions from this zone. The 100-period and 200-period Moving Averages (MAs) are closely aligned at 1.4032 and 1.4027, respectively. Their proximity to the local resistance suggests they will act as a price magnet toward those levels during a recovery. Conversely, a strong downward break below the pattern's neckline would invalidate the IHS setup and open the path for a more pronounced decline.

Trading Recommendations

Trading direction: Buy

Entry price: 1.3960

Target price: 1.4060

Stop loss: 1.3900

Validity: Dec 12, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Forex

Economic

Summary:

This quick reclaiming of the level suggests that a renewed upward move may be underway from this zone.

BUY USDCHF

Close Time

CLOSED

0.80017

Entry Price

0.80250

0.79850

0.80282 -0.00078 -0.10%

23.3

Pips

Profit

0.79850

0.80250

Exit Price

0.80017

Entry Price

0.80250

The latest data from the U.S. presented a conflicting view of the economy. The ISM Services PMI edged up slightly to 52.6 in November from 52.4, surpassing the 52.1 expectation and signaling sustained expansion in the crucial service sector. Conversely, the ADP Employment Change report showed that private sector payrolls surprisingly fell by 32,000 in November, drastically missing forecasts for a 5,000 increase. The October figure was also revised to a lower gain of 47,000. These data points confirm that private businesses cut 32,000 jobs in November, missing the estimate for a 10,000 increase and signaling a deceleration from October's revised 49,000 gain.

Amidst the softer labor data, political commentary continues to fuel rate-cut speculation. U.S. President Donald Trump stated on Tuesday that he would announce his nominee for the next Fed Chair in early 2026, confirming his Sunday comment: "I know who I’m going to choose, yes. We will be announcing it." Adding fuel to the dovish speculation is an unconfirmed report suggesting that former White House Economic Advisor, Kevin Hassett, is the favored candidate. Hassett is seen as an ally who supports President Trump's call for faster and deeper rate reductions to stimulate the economy.

Market participants are currently pricing in an approximately 88% probability of a 25 basis point (bp) rate reduction at the Federal Reserve's upcoming meeting, according to the CME FedWatch Tool. U.S. Treasury yields remain firm, with the 10-year Treasury yield sitting at 4.086%, while real yields hold stable at 1.856%.

In Switzerland, the latest inflation figures for November arrived mixed. The Consumer Price Index (CPI) fell 0.2% month-over-month (MoM), which aligned with expectations and followed a 0.3% decrease in the prior month. However, the annual rate fell to 0% from 0.1%, landing below the 0.1% forecast.

These mixed inflation readings reinforce expectations that the Swiss National Bank (SNB) will maintain its policy rate unchanged in December. Recent commentary from Chairman Martin Schlegel indicated that the threshold for returning to negative interest rates remains "high," although the SNB is prepared to cut if conditions necessitate it. Board member Petra Tschudin also noted that inflation is expected to increase slightly in the coming quarters. Possible Bullish Correction Upon Rapidly Recovering Support_1

Possible Bullish Correction Upon Rapidly Recovering Support_1

Technical Analysis

The USD/CHF pair has rapidly recovered to the 0.8000 psychological level, a point where the price initiated a strong bullish recovery on December 1st. This quick reclaiming of the level suggests that a renewed upward move may be underway from this zone. The bullish case is supported by the Relative Strength Index (RSI), which reached the 27 level , clearly signaling oversold conditions. This extreme reading is expected to attract buyers, with the initial objective being the bearish trendline resistance, near the $0.8025$ level.

The 100-period and 200-period Moving Averages (MAs) on the 1-hour chart are located at $0.8031$ and $0.8049$, respectively. Notably, the 100-period MA aligns closely with the bearish trendline and the $0.618$ Fibonacci retracement level. This confluence zone suggests a high probability that the current corrective move will be drawn toward these levels, where renewed selling pressure could reassert itself.

Trading Recommendations

Trading direction: Buy

Entry price: 0.8001

Target price: 0.8025

Stop loss: 0.7985

Validity: Dec 12, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Summary:

Reserve Bank of Australia Governor Bullock warned that persistent inflation may necessitate another tightening of monetary policy. The Australian dollar surged sharply on Wednesday.

BUY AUDUSD

EXP

PENDING

0.65350

Entry Price

0.68000

0.64400

0.66198 +0.00107 +0.16%

Pips

PENDING

0.64400

Exit Price

0.65350

Entry Price

0.68000

Fundamentals

The AUDUSD extended its gains on Wednesday, hitting its highest level since late October and approaching the 0.6600 mark. The market's initial reaction to disappointing Australian economic growth data proved short-lived, as the likelihood of further monetary policy easing by the Reserve Bank of Australia diminished.

Reserve Bank of Australia Governor Michele Bullock testified before the Senate Economic Legislation Committee that the bank remains highly vigilant about inflation pressures rising again and is prepared to act if price increases “persist longer than expected.” She noted that upcoming data releases in the coming months will be crucial for determining whether demand pressures are easing, adding that policymakers may still need to re-tighten monetary policy if signs of inflation resurgence emerge.

When questioned about past budget and inflation forecast errors, Bullock acknowledged that the Reserve Bank of Australia “has not yet succeeded” in bringing inflation back to target levels in a sustainable manner and must continue working toward this goal. She emphasized that the Board must “keep striving to achieve this.”

She noted that with the national debt projected to exceed A$1 trillion and the deficit expected to reach A$42 billion, declining public and private savings—if investment remains unchanged—could “exert upward pressure on the neutral interest rate.”

However, she added that such an outcome is possible, though it depends on both domestic and international factors. She emphasized that while the Reserve Bank of Australia can respond to domestic dynamics, we cannot control global factors.

Market Watch: The prevailing market view is that interest rate cuts are unlikely for an extended period. However, if upcoming data comes in better than expected, the possibility of an earlier rate hike cannot be ruled out.

Market Reprices Australian Interest Rate Outlook, Boosting Bullish Sentiment for the Australian Dollar_1

Technical Analysis

From a technical perspective, the AUDUSD break above 0.6579 further confirms that the pullback from 0.6706 may have ended at 0.6420. The uptrend from the 2025 low of 0.5913 may be resuming and could retest the 0.6706 high. The key question is whether the upward momentum can sustain itself to that level, or if it will weaken as it approaches that level.

Trading Recommendations

Trading Direction: Buy

Entry Price: 0.6535

Target Price: 0.6800

Stop Loss: 0.6440

Valid Until: December 20, 2025 23:55:00

Support: 0.6549, 0.6514, 0.6468

Resistance: 0.6597, 0.6617, 0.6707

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Summary:

The direction of asset allocation may be shifting, posing challenges to gold's upward momentum.

BUY XAUUSD

EXP

TRADING

4216.39

Entry Price

4346.00

4170.00

4219.36 +12.19 +0.29%

0.0

Pips

Flat

4170.00

Exit Price

4216.39

Entry Price

4346.00

Fundamentals

In today's trading, gold prices fell to US$4,194, down 0.59%, retreating from recent highs.

Gold's upward momentum may face challenges if market sentiment improves next year and asset allocation shifts back toward risk assets.

Although current gold futures positions exceed long-term averages, they remain well below this year's peak levels, potentially signaling a cooling of market optimism following the strong rally at the beginning of the year. However, with inflation persisting despite the ongoing rate-cutting cycle, investors may still increase their allocation to gold.

Central banks' demand for gold is more structural in nature, as the U.S. fiscal deficit has been expanding and emerging market central banks hold relatively low proportions of gold in their foreign exchange reserves.

Market Is Choosing Direction, Watch for Key Levels to Break_1

Technical Analysis

During Wednesday's European session, gold prices hovered near the lower end of their range. Despite mixed market sentiment, prices held above yesterday's low of US$4,163. Overall strength in equity markets was seen as a key factor weighing on the precious metal.

The current intraday high of US$4,230 has become a direct resistance level for bullish momentum. A break above this level would signal an early indication of further upward movement. The next resistance level stands at US$4,246; a breach of this threshold would mark the continuation of last week's rally and target the sell-off level at US$4,346.

On the other hand, should gold prices break below the US$4,182 threshold, the downward trend may continue. If yesterday's low of US$4,163 is breached, prices could test the US$4,100 level before ultimately falling to the converging support zone at US$4,075-US$4,073. This support area is formed by the 200 SMA in the 4H timeframe and the upward trendline established since late October.

Trading Recommendations

Trading Direction: Buy

Entry Price: 4205

Target Price: 4346

Stop Loss: 4170

Valid Until: December 20, 2025 23:55:00

Support: 4180, 4165, 4154

Resistance: 4220, 4228, 4239

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The Pound Sterling gained against the US Dollar amid rising speculation that White House Economic Adviser Kevin Hassett could succeed Jerome Powell as Federal Reserve chair, prompting a weaker Dollar and renewed bullish momentum for GBP/USD.

BUY GBPUSD

Close Time

CLOSED

1.33001

Entry Price

1.35000

1.31500

1.33406 +0.00135 +0.10%

55.8

Pips

Profit

1.31500

1.33559

Exit Price

1.33001

Entry Price

1.35000

The Pound Sterling (GBP) surged 0.5% on Wednesday to approach 1.3280 against the US Dollar (USD) during European trading hours, as the Greenback came under pressure following growing speculation over the next Federal Reserve (Fed) chair. The US Dollar Index (DXY), which measures the currency against six major peers, slumped to a fresh monthly low near 99.00, reflecting the market’s unease over potential changes in US monetary policy leadership.

Investor attention has sharply shifted to the US White House, where President Donald Trump confirmed on Tuesday that he has narrowed his options for Fed Chair Jerome Powell’s successor to a single candidate, with an official announcement expected in early 2026. Speaking to reporters at a White House event, Trump referenced White House Economic Adviser Kevin Hassett as a potential nominee.

Markets are interpreting the potential appointment of Hassett as bearish for the US Dollar. Hassett has publicly advocated for lower interest rates on multiple occasions, a stance that contrasts with the current hawkish tone at the Fed under Powell. Investors are pricing in the possibility of a shift toward more accommodative US monetary policy, weighing heavily on the Dollar and supporting risk-sensitive assets, including the Pound.

Techncal Analysis

From a technical standpoint, GBP/USD has shown a pronounced recovery after weeks of consolidation and downward pressure. The currency pair recently breached a strong resistance trend line, a level that had been tested multiple times in prior sessions without success. This breakout followed a double bottom formation, providing an initial bullish signal.

Intraday, GBP/USD leveraged support from the 50-day exponential moving average (EMA50) while simultaneously adhering to a bullish corrective trend line on a short-term basis. These technical factors fueled renewed momentum, allowing the pair to recover from a key support test near 1.3195. Complementing the bullish scenario, relative strength indicators have emerged with positive signals, further reinforcing the potential for continued gains.

On the daily chart, GBP/USD maintains a robust bullish structure, having surpassed the previous week’s high. This reinforces market confidence that the Pound could extend its rally in the near term. Analysts highlight that the ongoing Dollar weakness, driven by Fed succession uncertainty, could catalyze additional upside pressure for GBP/USD.

The long position appears justified based on both fundamental and technical factors. Key target levels for the pair include 1.337 as the initial take-profit, followed by 1.350 for more extended gains, contingent on the persistence of bullish momentum and a lack of USD recovery.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.3300

STOP LOSS: 1.3150

TAKE PROFIT: 1.3500

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Traders' Opinions

Summary:

USD/CHF weakens as political uncertainty and rising expectations of Fed easing pressure the US Dollar, while mixed Swiss inflation reinforces a steady SNB outlook.

SELL USDCHF

Close Time

CLOSED

0.80000

Entry Price

0.79500

0.80260

0.80282 -0.00078 -0.10%

26.0

Pips

Loss

0.79500

0.80261

Exit Price

0.80000

Entry Price

0.80260

The USD/CHF pair extended its cautious decline on Wednesday, stabilizing slightly above the 0.8000 threshold but maintaining a heavy tone as it traded near 0.8010, down 0.25% on the day. The move reflects growing pressure on the US Dollar, which continues to underperform across major currencies as political uncertainty deepens and expectations of Federal Reserve easing accelerate. The US Dollar Index drifted to around 99.10, losing another 0.15% and edging closer to key multi-month lows, a sign that bearish momentum remains firmly in place.

Market sentiment was jolted this week after US President Donald Trump hinted that White House Economic Adviser Kevin Hassett could be named as the next Federal Reserve Chair when Jerome Powell’s term expires in early 2026. Financial markets interpreted the statement as a clear signal that the administration may push for a more dovish policy direction. Hassett is widely viewed as supportive of lower interest rates, and the possibility of a more accommodative Fed over the coming years has contributed to a softening outlook for the Dollar.

At the same time, traders continue to navigate an uncertain US macroeconomic backdrop. Attention now turns to the release of November’s ADP Employment Change report, which is expected to show a significant drop in private-sector job creation, falling to only 5,000 positions from October’s 42,000. The cooling labor trend will be further tested by the ISM Services PMI reading, forecast to decline modestly to 52.1 from 52.4. Both indicators carry added weight due to the postponement of the official Nonfarm Payrolls report, which has been delayed until December 16 because of the government shutdown. The absence of the NFP report has forced investors to rely more heavily on secondary labor indicators to gauge the health of the economy.

Commentary from Federal Open Market Committee members has further reinforced expectations that the US economy is losing momentum. Several policymakers have hinted that labor demand may be weakening faster than previously expected, and many have signaled a willingness to support additional monetary easing if required. Market pricing now reflects an 85 percent chance of a 25-basis-point rate cut next week, according to CME’s FedWatch tool. For traders, the combination of softer data, political noise, and a potentially more dovish central bank has created a challenging environment for the Dollar to recover.

Across the Atlantic, Switzerland’s economic data offered its own mixture of stability and caution. The Swiss Consumer Price Index fell by 0.2 percent month-on-month in November, matching expectations and reversing the previous month’s sharper decline. However, the annual inflation rate slipped to zero percent, undershooting the consensus forecast and underscoring Switzerland’s uniquely low-inflation environment. This subdued pricing outlook strengthens expectations that the Swiss National Bank will leave its policy rate unchanged at its upcoming meeting. SNB Chair Martin Schlegel recently noted that the threshold for returning to negative interest rates remains high, but he also emphasized the central bank’s readiness to act if conditions deteriorate. Meanwhile, SNB Board Member Petra Tschudin said inflation may rise modestly over the coming quarters, though the overall trajectory remains comfortably contained.

Technical Analysis

From a technical perspective, USD/CHF maintains a bearish posture that continues to be reinforced by market structure. The pair remains confined within a downward corrective channel that has repeatedly limited attempts at upward recovery. Price action is firmly below the 50-period simple moving average, which continues to act as dynamic resistance and confirms the bearish bias. Momentum indicators such as the Relative Strength Index remain in negative territory and have failed to generate meaningful bullish divergence, even after touching oversold levels. The pair’s inability to break above the descending trendline or re-enter the Ichimoku cloud highlights persistent selling pressure and affirms that rallies continue to be met with supply.

The recent rejection from the pullback region around 0.8026 confirms the resilience of short-term resistance, while the broader market landscape suggests limited appetite for a sustained recovery as long as Fed policy expectations lean dovish and macro uncertainty remains elevated. The next meaningful downside area sits near the 0.7950 region, roughly aligned with the 61.8 percent Fibonacci retracement, where some traders expect the pair to encounter initial support.

TRADE RECOMMENDATION

SELL USDCHF

ENTRY PRICE: 0.8000

STOP LOSS: 0.8026

TAKE PROFIT: 0.7950

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

AUD/USD climbed toward 0.6600 after Q3 GDP data showed weaker headline growth but surprisingly resilient domestic demand. With the RBA likely to hold rates while markets expect aggressive Fed cuts, the widening policy gap could push AUD/USD toward 0.6700, supported by strong technical momentum.

BUY AUDUSD

Close Time

CLOSED

0.65900

Entry Price

0.67000

0.65300

0.66198 +0.00107 +0.16%

20.5

Pips

Profit

0.65300

0.66105

Exit Price

0.65900

Entry Price

0.67000

The Australian dollar advanced to a multi-week high near 0.6600 on Wednesday, as traders looked past a softer-than-expected GDP headline and instead focused on the underlying strength of private investment and household consumption. The latest figures, while modest on the surface, effectively reinforced the Reserve Bank of Australia’s case for remaining on hold — a stance that stands in stark contrast to expectations for significant policy easing from the U.S. Federal Reserve next year.

Australia’s economy expanded 0.4% in the third quarter, slowing from 0.7% in Q2 and falling short of both market forecasts (0.7%) and the RBA’s own 0.5% projection. On an annual basis, GDP rose 2.1%, broadly aligned with the central bank’s estimate for year-end growth around 2%, suggesting the economy retains enough underlying momentum to keep inflationary pressures from fading too quickly.

Yet the headline disappointment masked a sturdier story beneath the surface. The largest drag came from inventory destocking, which shaved 0.5 percentage points off growth — a temporary factor rather than a signal of weakening demand. Stripping this out reveals a surprisingly solid performance in private domestic demand, the area the RBA watches most closely for inflation persistence.

Private investment added 0.5 percentage points to GDP, fueled by large-scale data center expansions and continued corporate capital expenditure. Household consumption also contributed positively, adding 0.3 percentage points, driven primarily by essential spending rather than discretionary splurges. In other words, Australian consumers are cautious but not collapsing, and businesses continue to deploy capital with confidence despite tighter financial conditions.

This divergence in domestic and external pressures gives policymakers little reason to shift their current bias. Markets seem to agree — the swaps curve continues to price additional tightening risks in Australia over the next year, even as traders expect the Fed to deliver up to 100 basis points of cuts. For currency markets, that creates a widening one-year implied policy rate differential squarely in the Australian dollar’s favor.

Analysts at Brown Brothers Harriman (BBH) argue that this gap provides material upside for AUD/USD, potentially pushing the pair toward 0.6700 in the months ahead if U.S. yields continue to decline while Australian rates stay anchored at elevated levels. For now, traders appear comfortable leaning into that narrative, with the Aussie’s latest surge suggesting growing conviction that policy spreads matter more than soft patches in headline growth.

Technical Analysis

From a technical standpoint, AUD/USD continues to reinforce its bullish bias, with price action preparing to challenge the immediate resistance level at 0.6580. The pair is finding dynamic support from the 50-day EMA, which has acted as a springboard for intraday rallies, while relative strength indicators are flashing constructive signals despite extended readings.

Momentum remains firmly tilted to the upside, shaped by a minor but persistent bullish wave on the short-term time frame. The strong and broadening volume profile around recent gains underscores buyers’ commitment, suggesting that a clean break above 0.6580 could open the door for a retest of the psychological 0.6700 handle — a level increasingly aligned with the macro narrative of widening policy divergence.